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A cross-national analysis on the impact of enforcement on impairments of tangible assets under IFRS

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  • Karampinis, Nikolaos I.

Abstract

This study evaluates the potential indicators of tangible asset impairments (TAI) and their interaction with legal enforcement, using an international sample of 38 countries that follow International Financial Reporting Standards. Consistent with expectations, specific economic and opportunistic indicators demonstrate a significant relationship with TAI, and these are further affected by legal enforcement. In particular, empirical findings suggest that in weak enforcement countries, besides economic indicators, the opportunistic indicators of earnings smoothing and debt pressure are significantly related to TAI. In strong enforcement countries, the importance of economic indicators increases substantially, while the effect of the opportunistic debt-related indicator attenuates and the indicator of earnings smoothing is immaterial. This evidence suggests that legal enforcement constitutes a beneficial institutional attribute, but does not restrain all aspects of managerial opportunism.

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  • Karampinis, Nikolaos I., 2021. "A cross-national analysis on the impact of enforcement on impairments of tangible assets under IFRS," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 42(C).
    • Handle: RePEc:eee:jiaata:v:42:y:2021:i:c:s1061951820300598
    DOI: 10.1016/j.intaccaudtax.2020.100358
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    More about this item

    Keywords

    International Financial Reporting Standards; Tangible asset impairments; Enforcement; Incentives;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • K20 - Law and Economics - - Regulation and Business Law - - - General

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